Unfortunately, we have to once again discuss the potential irregularities at one of our blue chip companies, i.e. Capitec. Viceroy, the short-selling research company that issued the damning report on Steinhoff, issued a new report in which they attacked Capitec on various fronts. Their spectacular success with Steinhoff means this firm’s attack on Capitec now carries disproportionate weight.
But each such case needs to be treated on its own merit. The report alleged that Capitec was a reckless lender; underprovided for bad loans; and extended underperforming loans under new agreements. The management of Capitec countered and said the report was inaccurate and not based on fact. The Reserve Bank also defended Capitec and said the bank met all the necessary liquidity requirements.
There are a lot of questions regarding the safety of personal deposits in Capitec and all we can say is that, given the current available information, there seems to be no danger in keeping your accounts at Capitec. We will follow the unfolding story and give feedback as and when necessary.
Investing in Capitec shares is another story. Until everything becomes clear, the rumours will cause a lot of volatility and extreme caution should be exercised when trading in these shares.